CHEMICAL UPDATE
September 2008
McIlvaine Company
TABLE OF CONTENTS
Two reports are now posted in the Chemical Industry Analysis and Forecast Report. The reports are linked from the Country Analyses tab on the top banner, then European Union link on left table of contents, or by clicking on each report name below:
European Chemical Industry Council —
Cefic Chemical Trends Report September 2008
European Chemical Industry Council Reports
End-Use Industry Trends Influence Inorganic Chemical Market
Plant Construction Activity Stays Elevated Worldwide
Westlake Chemical to Construct Chlor Alkali Plant in Geismar, Louisiana
CB&I to Design and Build Sulfur Processing Complex
Praxair China Signs Supply Contract with Anhui HuaYi Chemical
KBR to Implement Phenol Technology in Changzhou Kingboard Century Chemical Plant
Tessenderlo Kerley, Inc. Acquires Agrochem, Turkey
PPG to Acquire BASF North American Coil, Extrusion Coatings Business
LyondellBasell Launches New HDPE Resins - Improved Resistance to Bio-Diesel Fuels
ExxonMobil Chemical Steps Up Asia Pacific Specialty Compounds Supply
European Chemical Industry Council Reports
Cefic, the European Chemical Industry Council, recently published the Chemical Trends Report, September 2008. The report states that all indicators give a modest picture of the EU chemical industry. Output in the EU chemical industry (excluding pharmaceuticals) decreased by 2.4% in June 2008 in a ‘year-on-year’ comparison. Furthermore, when considering the first half of 2008, output in the EU chemicals industry (excluding pharmaceuticals) experienced a decline of 0.5% compared to the same period of 2007. Price data shows that chemical products (excluding pharmaceuticals) were 6.2% more expensive in the first seven months of 2008 than in the same period of 2007. CLICK HERE to read the report.
The Cefic Review 2007-2008 states that among the 20 largest chemical companies in the world, 10 are European corporations, and half of the world’s largest chemical companies are headquartered in the EU. CLICK HERE to read the report.
End-Use Industry Trends Influence Inorganic Chemical Market
A recent report by Global Industry Analysts, Inc. states that end-use industry trends will influence growth in the inorganic chemicals market. Inorganic chemicals are utilized either as catalysts or as processing aids, and application is mostly in agricultural and industrial sectors. The market is characterized by the presence of high-volume products, and limited R&D expenditure. The cost of production in the inorganic chemicals industry is relatively high due to enormous expenditure associated with handling and disposal of toxic wastes. Globalization and shift towards specialty chemicals of high-value are two major changes in the worldwide chemical industry. Consequently, production resources, research and development and finances are emerging as critical factors, particularly for large industry participants. Such a scenario is proving detrimental for small and mid-sized local players addressing domestic market requirements, as their operations are no longer viable in the changed context.
Growth in the worldwide market for hydrogen peroxide (H2O2) is expected to be promising, primarily due to its increased utilization in a rapidly growing pulp and paper industry. Fast-paced growth in the paper and pulp industry, brought on by the advent of new technologies, evolution of mechanical wood pulp, de-linked waste pulp, and chemical mechanical pulp present vast growth opportunities for hydrogen peroxide market. Rising demand from industrial consumers, particularly waste treatment industry, expanding uses for the chemical, increasing utilization of H2O2 as a substitute for chlorine are anticipated to propel sales in the market. While North America and Western Europe constitute major markets for H2O2, future growth in the market is expected from emerging markets of Asia-Pacific and Latin America. Increasing pulp production in developing regions, and replacement of chlorine with H2O2 in bleaching activities are fostering sales of the chemical.
Chlor-alkali is one of the largest inorganic chemicals market, in terms of value, with products such as chlorine, sodium hydroxide (caustic soda), and calcium carbonate (soda ash). Asia and Middle East are emerging as major markets for chlor-alkali. Chlorine is a major inorganic chemical commodity that is employed in the production of PVC and organic chemicals, inorganic applications, pulp and paper industry, water treatment, and other sectors such as crop protection. With derivatives such as PVC, EDC and VCM accounting for a larger share of consumption in developing regions, and also anticipated to increase at a faster pace compared to other end-uses, the chlorine market is projected to grow rapidly in Asia, Middle East and Latin America. On the other hand, the chlorine derivatives market in North America is affected by the high cost of natural gas, resulting in declining exports.
Plant Construction Activity Stays Elevated Worldwide
Hydrocarbon Processing’s 2009 Market Data Book reports that worldwide total projects were up 12% (526) and projects increased in every region in the world. Refining projects increased by 11%, gas processing by 27% and synfuels by 15%. Petrochemical projects recorded an increase in the period from June 2007 to June 2008. All others—which includes environmental and control projects—increased by 26%.
Westlake Chemical to Construct Chlor Alkali Plant in Geismar, Louisiana
Westlake Chemical Corporation announced recently it will construct a new chlor alkali plant to be located at its vinyls manufacturing complex in Geismar, Louisiana.
The new chlor alkali unit is estimated to produce 250,000 electro chemical units (ECU's,) annually, bringing the company's total estimated ECU capacity upon completion to 525,000 per year. This new plant is in line with Westlake's vertical integration strategy for its vinyls business and allows the company to achieve chlorine integration.
Albert Chao, Westlake's President and CEO stated, "This new facility is an important strategic investment for Westlake and will further enhance the vertical integration of our vinyls segment and allow us to capture value throughout the entire vinyls chain. This new construction, along with the previously announced expansions of our Calvert City, KY operations and the construction of a new PVC pipe plant in Arizona, will also allow us to offer our customers a wide array of quality products and service on a coast to coast basis."
The project is currently estimated to cost between $250 million and $300 million and is targeted for start-up in the 1st half of 2011 and will be partially funded by the Gulf Opportunity Zone bonds issued in 2007. The plant will utilize state of the art membrane technology and is expected to create approximately 100 permanent positions and 400 to 500 construction jobs. The new unit will be adjacent to the existing vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) facilities at the Geismar complex.
CB&I to Design and Build Sulfur Processing Complex
CB&I has a contract in excess of $100 million with a major North American refiner to design and build a sulfur processing complex. This project was awarded in the second quarter of 2008 and is scheduled for completion in 2010.
CB&I has been awarded an additional $400 million by Suncor Energy Services Inc. under an existing contract to design and build a storage terminal as part of the Suncor Voyageur Upgrader oil sands project. The original contract was awarded in July 2006 and the total contract value is approximately $500 million.
CB&I's scope of work includes detailed engineering design, procurement, fabrication, field construction and mechanical installation, including supporting infrastructure. The project, located approximately 25 kilometers northeast of Fort McMurray, Alberta, Canada, is scheduled to be completed in 2011.
Praxair China Signs Supply Contract with Anhui HuaYi Chemical
Praxair (China) Investment Co., Ltd. has signed a long-term supply contract with Anhui HuaYi Chemical Co., Ltd., an affiliate of Shanghai HuaYi (Group) Co., Ltd., one of the largest chemical groups in China supplying fine and specialty chemicals.
Under this contract, Praxair China will build another of the largest single-train air separation plants in Asia. The plant, due to start up in early 2011, will supply 3,000 tons per day of oxygen for the Wuwei coking project of Anhui HuaYi, which is located in Anhui Province, about 100 kilometers from Nanjing. At present, Praxair is constructing a similar sized plant for another Chinese customer in Jiangsu Province. Both plants will supply oxygen to gasification units which will provide feedstock to the chemical industry.
"The Wuwei coking project is a long-term investment by Anhui HuaYi and we are confident that its growth potential will lead to a future expansion of the partnership between the HuaYi Group and Praxair China," said David Chow, president of Praxair China.
Praxair (China) Investment Co., Ltd is a leading industrial gas provider in China. It is headquartered in Shanghai, has 15 wholly owned companies, 10 joint ventures and over 1,200 employees in the country with 2007 sales of more than $300 million.
KBR to Implement Phenol Technology in Changzhou Kingboard Century Chemical Plant
KBR (NYSE:KBR) recently announced that it has been awarded a contract by Changzhou Kingboard Century Chemical Co., Ltd (Kingboard) to provide licensing and related services for a new phenol plant in Changzhou, China.
As part of the contract, KBR will license its leading phenol technology for the 200,000 metric tons per annum (MTPA) phenol plant. KBR will also provide preliminary design, and commissioning and startup support services. Work on the project is expected to begin immediately.
This award marks the second phenol plant Kingboard has licensed from KBR. The first phenol plant, located in Huizhou, China, went online at the end of 2007.
BASF [BAS, BFA, AN] plans to acquire Ciba Holding AG, Basel, Switzerland, [CIBN], a leading specialty chemical company, and will make a public takeover offer to Ciba’s shareholders. BASF will pay CHF 50.00 in cash for each nominal share in Ciba. BASF and Ciba have reached a transaction agreement in which the Board of Directors of Ciba supports BASF’s attractive offer and recommends its acceptance to Ciba’s shareholders. Based on all outstanding Ciba shares and including all net financial liabilities and pension obligations, the enterprise value would be CHF 6.1 billion (approximately €3.8 billion).
“With the acquisition of Ciba, we are strengthening our portfolio and expanding our leading position in specialty chemicals with products and services for a variety of customer industries, in particular the plastics and coatings industries as well as water treatment. In paper chemicals, we will intensify the urgently needed restructuring process and become the leading supplier with an extensive portfolio. We will grow profitably in accordance with our clear and successful strategy. The transaction meets our acquisition criteria. We expect that it will make a positive contribution to earnings per share in the second year,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE. “Our attractive cash offer gives Ciba shareholders the opportunity to realize the full value of their investment plus a high premium immediately,” he added.
“Against the backdrop of increasingly challenging conditions within our industry, this is a transaction which combines a fair price with an industrially compelling solution for Ciba,” said Dr. Armin Meyer, Chairman of the Board of Directors of Ciba. “Ciba’s businesses will be strengthened substantially thanks to integration into BASF’s Verbund and the access to BASF’s research, production and marketing platform. This applies particularly in the Plastics, Coatings and Paper divisions. BASF is a long-standing customer and supplier of Ciba and well-acquainted with our people and our business. The acquisition of Ciba by BASF will provide a long-term perspective for profitable growth of the Basel operations in particular and our other businesses around the world.”
The merger of the activities of BASF and Ciba would extend BASF’s leading position as a preferred supplier to the plastics industry and make BASF the second-largest supplier of coating effect materials. In the fast-growing and highly profitable market for plastics additives, BASF would expand its portfolio by gaining important product segments such as UV stabilizers and antioxidants. In the area of coating effect materials, the combination of BASF and Ciba would offer an extensive range of pigments, resins and additives.
Thanks to economies of scale and greater efficiency, the resulting leading supplier of chemicals for the paper industry would offer the broadest product portfolio in the industry and with its global reach would provide customers with the best range of products and services in a difficult market environment. Extensive restructuring is necessary throughout the entire paper value chain. By combining and repositioning the paper chemicals businesses of BASF and Ciba, BASF would start this urgently needed process with the aim of ensuring the long-term profitability of these activities.
In addition, the planned acquisition would strengthen BASF’s presence in fast-growing emerging countries and improve its market position in important industries such as automotive, packaging, construction, electronics and water purification.
BASF expects to finalize the transaction in the first quarter of 2009 at the latest. The financing for the offer is in place.
Ciba employs about 13,000 at approximately 60 sites with sales at €4.0 billion.
Tessenderlo Kerley, Inc. Acquires Agrochem, Turkey
Tessenderlo Kerley, Inc. (TKI) announced recently the acquisition of the assets, marketing and distribution channels of Agrochem of Istanbul and Izmir, Turkey. The company will be called Tessenderlo Agrochem (TA).
Agrochem has been a key distributer for TKI in the area for the past 14 years and in addition has been manufacturing TKI plant nutrient solutions including KTS®, NZN®, KPS™, NMg® and NFE®. Plant expansion is planned to begin producing urea-triazone slow release nitrogen solutions as well.
Ugurtan Cop will continue as general manager of Tessenderlo Agrochem and TA will retain current employees within the organization.
Tessenderlo Kerley, Inc. headquartered in Phoenix, Arizona, produces and markets specialty chemical solutions, including fertilizers, crop protection chemicals and process chemicals and services to diverse markets in the United States, Mexico, Central and South America and selected European countries and the United Kingdom. TKI operates 10 manufacturing plants in North America, in addition to an extensive terminal network. (www.tkinet.com) TKI is a subsidiary of the Tessenderlo Group, Brussels, Belgium.
Tessenderlo Group is an international chemicals group with more than 100 branches in 20 countries. Around 8,100 people work for the group. The group is a world and European leader in most of its product areas. Tessenderlo Chemie NV is listed on Eurolist by Euronext Brussels and is part of Next 150 and BEL Mid. (www.tessenderlogroup.com)
PPG to Acquire BASF North American Coil, Extrusion Coatings Business
PPG Industries (NYSE:PPG) recently announced it has reached an agreement with BASF Corp. to acquire that company’s North American coil and extrusion coatings (COEX) business. The agreement does not include the COEX businesses of BASF SE in Europe, South America and Asia. Terms were not disclosed.
BASF’s North American COEX business serves the construction; appliance; transportation; heating, ventilation and air conditioning (HVAC); lighting fixture; and extrusion industries. The business operates manufacturing sites in Decatur, Ala., and Monterrey, Mexico, as well as a production line in Belvidere, N.J. The business employs approximately 200 people.
PPG will acquire saleable BASF inventory, customer list and book of business as well as various patents and trade names associated with acquired products. BASF will continue to supply products from Decatur, Belvidere and Monterrey under a Manufacturing Supply Agreements for 11 to 12 months, after which BASF will close the Decatur facility and the Belvidere facility’s Plastisol line.
Production from the Decatur and Belvidere operations will transfer to PPG’s Springdale, Pa., plant, where approximately $8 million will be spent to install equipment needed for the consolidation.
Pittsburgh-based PPG is a global supplier of paints, coatings, chemicals, optical products, specialty materials, glass and fiber glass. The company has more than 150 manufacturing facilities and equity affiliates and operates in more than 60 countries.
LyondellBasell Launches New HDPE Resins - Improved Resistance To Bio-Diesel Fuels
LyondellBasell Industries, Rotterdam, Netherlands, has commercialized a family of newly patented Lupolen high density polyethylene (HDPE) resins that offer improved resistance to bio-diesel and may therefore be of interest to manufacturers of automotive plastic fuel tanks.
The new resin, addressed to the needs of fuel tank producers facing bio-based product challenges, is available for use in blow molding (Lupolen 4261 AG BD) and injection molding (Lupolen 4261A IM BD) processes.
"With this new resin, we have improved chemical resistance that should allow manufacturers to produce fuel tanks that can accommodate fuels containing higher levels of bio-diesel," said Thomas Lindner, Technical Manager of LyondellBasell's Automotive Fluid Systems Business.
Lupolen HDPE test data using blow molded and injection molded parts have shown a significant increase in chemical resistance to bio-diesel fuels compared to current HDPE grades on the market. After 1500 hours of contact with fuel consisting of 100 percent bio-diesel, the grade changed its intrinsic viscosity by 1.7 percent, which corresponds to a nearly thirty-fold improvement in resistance compared to standard HDPE grades previously used by customers in fuel tank applications.
"Of particular importance to customers is that with improved chemical resistance to bio-diesel, Lupolen 4261 AG BD and Lupolen 4261A IM BD maintain their physical and chemical properties at the same level when compared to our conventional Lupolen 4261A product family," said Lindner. "This also applies to the melt viscosity during processing, so previous molds and machinery are expected to require no modifications."
LyondellBasell's test method subjected fuel tank samples to temperatures of 40 degrees Celsius, with an exposure time of 11 years using 100 percent bio-diesel samples.
"Our new bio-diesel grades will address automotive industry demands for resins that meet alternative fuel technology needs. The relevant EU Directive on the use of bio-fuels or other renewable fuels for transport is expected to require bio-fuels to attain a higher percent share of the total fuel market by 2010. This is something that we should be prepared for," said Richard Roudeix, Vice President of LyondellBasell's Automotive Fluid Systems Business.
ExxonMobil Chemical Steps Up Asia Pacific Specialty Compounds Supply
ExxonMobil Chemical will improve the supply of its specialty compounds in Asia Pacific following the establishment of a compounding agreement with Resin & Pigment Technologies Pte. Ltd. (R&P), a subsidiary of EnGro Corporation Limited. Under the agreement, R&P will manufacture a broad range of ExxonMobil Chemical's specialty compounds for use in automotive interior and exterior applications, appliances and consumer products.
The R&P facility is located on Jurong Island, Singapore, just two kilometers from ExxonMobil Chemical's petrochemical complex. ExxonMobil Chemical will leverage its global portfolio of specialty plastics and elastomers using the Singapore complex as the primary source of polyolefins for the production of its specialty compounds. The R&P facility is ISO 9001 certified and recently achieved ISO/TS 16949 automotive certification.
Specialty compounds, such as ExxonMobil's line of Exxtral™ performance polyolefins, will be produced at R&P's facility to supply customers throughout Asia Pacific. This new capacity, which can be expanded significantly in line with growing needs, will improve ExxonMobil Chemical's global supply. ExxonMobil Chemical will utilize its existing sales network and service infrastructure to serve customers across the region.
"Because this simplifies the supply chain, we can respond more quickly to changes in demand," said Jim McKinley, manager, ExxonMobil Chemical specialty compounds business. "Our aim is to provide more efficient, larger-scale production close to the source of integrated feedstock supply. By offering a wider range of high-performance materials from the region's Singapore hub, our Asia Pacific customers will benefit from more efficient service and supply."
Earlier this year, ExxonMobil Chemical announced the start-up of a new $20 million specialty compounding facility in Baton Rouge, Louisiana, with an annual capacity of 40 thousand tons. This facility complements ExxonMobil Chemical's compounding capability in Lillebonne, France, and additional compounding capacity from regional service providers.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Web site: www.mcilvainecompany.com